By John Richardson IT is not a question if, but rather when Xi Jinping and Li Keqiang decide that enough is enough and get on with tackling China’s growing financial imbalances. That is if they don’t want the whole house of cards to eventually collapse, which we believe is not the case. These imbalances have […]
Asian Chemical Connections
Malaysia: Taking The Long View
Source: Malaysia Petrochemicals Association By John Richardson THE problems in Malaysia have been evident for a long time. But thanks to the irresponsible and failed actions of the US Fed, the flow of funds into the Southeast country had led to a papering-over of the cracks in its economic growth model. The same, as […]
China Market Intelligence Still Contradicts PE Demand Rise
By John Richardson The debate continues as to exactly why polyethylene (PE) apparent demand (domestic production plus imports) in China rose by 13% in January-June of this year compared with the same period in 2011. Why the anxiety? Because most of the industry people that the blog speaks are still finding it difficult to match […]
Australia and The US: History Could Repeat Itself
By John Richardson A PERTH-based businessman who made a very basic piece equipment for the Australian mining industry (details disguised for confidentiality reasons) incurred total production costs of just Aus$6 for each item he produced as a against a sale price of Aus$60 a time. Yes, this is not printing mistake – Aus$60! Quite […]
Crossing The River By Feeling The Stones
Deng Xiaoping By John Richardson ANDREW Mackenzie, in his first speech in Australia as BHP Billiton’s new chief executive, said that global demand for commodities would grow by 75% over the next 15 years, driven by continuing urbanisation in China and the growth of Asia’s middle classes. The blog wishes that it shared Mr […]
Adjusting Inventories To Lower China Growth
By John Richardson EXCESSIVE inventory building across a range of commodities in China, including petrochemicals, continues to worry the blog. One reason, as we discussed yesterday, might be that traders are in the midst of a liquidity squeeze as a result of the late June credit crackdown. They have therefore taken out further very-aggressive positions […]
China Commodities Rally About Protecting Existing Debt
By John Richardson OVER the last few days we have focused on the increased risk-on trade in commodities, including petrochemicals. But maybe the rallies we have seen in products such as fibre intermediates and polyethylene (PE) are mainly about traders being forced to increase their risk profiles in order to protect existing liquidity. Here is the […]
More People Wanting To Buy Than Sell
By John Richardson SOME people in the petrochemicals industry are showing great confidence in the future. Perhaps it is no coincidence that several of these people are said to be Chinese domestic traders in polyethylene (PE) and mono-ethylene glycol (MEG) who might have long positions to protect. But if PE is in genuinely wonderful shape, […]
Water Shortages to Scupper China CTO Industry
By John Richardson THE debate about how exactly how much coal-to-olefins (CTO) capacity China will add has been largely around the economics of the process versus that of naphtha cracking. In terms of capital costs, building a CTO complex costs 1.5-2 times more than constructing a naphtha cracker, according to our colleagues at CBI […]
China’s “Mini-Stimulus” Package
By John Richardson The big question this morning for anybody concerned about China’s long-term economic future is whether its “mini-stimulus package” will do any good. Yesterday, Beijing announced that it would eliminate taxes on small businesses, reduce costs for exporters and line-up funds for the construction of railways. This followed Prime Minister Li Keqiang declaring […]
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